World News

07/01/2003

BUSINESS TRENDS

Chip sales unchanged, B-to-B drops in April

Worldwide sales of semiconductors totaled $12.1 billion in April, essentially the same total as March, but a 9.7% increase from April 2002 revenue of $11.3 billion, according to data from the Semiconductor Industry Association (SIA).

SIA president George Scalise attributed the flat April sales to sluggish global economic growth and the outbreak of SARS in China, which pushed sales that would have been made in April to future months.

In the US, Scalise said that "an anticipated corporate PC upgrade cycle, expected to add strength to continuing consumer purchases of PCs, has again been pushed back as executives cite continuing economic uncertainty and reduced visibility."

Scalise also said that there were positive indicators. "Leading-edge capacity utilization reached 97%, essentially full capacity," he said. "And inventories are at or below target levels. Any pick up in demand will translate directly to revenue growth."

North American-based manufacturers of semiconductor equipment posted $737 million in orders in April and a book-to-bill ratio of 0.86, according to Semiconductor Equipment and Materials International (Semi).

The three-month average of worldwide bookings in April was $737 million. The bookings figure is 5% below the revised March 2003 level of $777 million, and 26% below the $996 million in orders posted in April 2002.

"Despite hopeful indications in last month's figures, orders for new semiconductor-manufacturing equipment remain at relatively low levels," said Stanley Myers, president and CEO of Semi.

"The April data reflect continuing uncertainty in the broader markets in regard to recovery in consumer and commercial spending," he continued.

Frontend capacity utilization totaled 82.4% in April, up from a revised 81.4% in March, according to VLSI Research Inc.'s Industry Pulse Pro. That number is projected to rise slightly to 82.5% in May and down to 80.8% in June, according to VLSI.

VLSI Research forecasts that May's book-to-bill ratio will drop to 0.95, with bookings of $2.35 billion and sales of $2.48 billion.

Based on these latest findings, VLSI Research's annual forecast is as follows: Equipment revenues for 2003 are expected to reach $31.3 billion, up 5.6% from 2002; and IC billings are predicted to amount to $131.8 billion.

WORLDWIDE HIGHLIGHTS

The World Semiconductor Council (WSC) recently called on China to open its market fully to all foreign semiconductor products.

Specifically, the WSC urged China, which is a member of the World Trade Organization (WTO), to honor its WTO commitments by doing away with the "discriminatory" value-added tax (VAT) on all semiconductors.

China applies a 17% VAT on imports, while domestic products are eligible for a rebate, which renders the effective VAT rate either 3% or 6% for Chinese companies.

In addition to its call for China to open its market, the WSC also condemned chip counterfeiting, recommended that copyright levies not be applied to digital products, and re-emphasized its support for sound environment, safety, and health practices.

Following a relatively strong 1Q03 bolstered by better-than-expected semiconductor sales in March, the worldwide semiconductor market is forecast to grow 8.3% in 2003, with revenue totaling $168 billion, up from $152 billion in 2002, according to Gartner Inc.

"With quarterly sequential growth at about negative 3.5% in 1Q03, but likely to turn mildly positive in 2Q03, it appears that the industry is capable of growing in the high single digits this year," said Richard Gordon, research VP for Gartner's semiconductor research group.

"However," he continued, "even though some of the geopolitical uncertainty that has been dogging the global macroeconomic environment receded with the end of the war in Iraq, and with the severe acute respiratory syndrome (SARS) outbreak seemingly more under control, indications about the level of demand for semiconductors in 2H03 remain stubbornly elusive."

Gartner analysts indicated that businesses are not yet feeling confident enough to make the decision to invest, putting a cautious outlook on the onset of the corporate PC replacement cycle.

USA

Brooks Automation Inc., Chelmsford, MA, said privately held Berkeley Process Control Inc. has terminated its agreement for Brooks to acquire Berkeley, a transaction that was targeted for completion by the end of CY02. The companies have terminated the agreement due to changes in the business environment.

National Semiconductor, Santa Clara, CA, will cut about 340 jobs and close a business unit as part of its efforts to reduce costs. The company will close down a unit that makes components for cell phones, and is in discussions to sell its information appliance unit.

EBARA Technologies Inc., Sacramento, CA, the US subsidiary of EBARA Corp., Japan, has joined the SiLKnet Alliance data network to develop CMP processes with SiLK semiconductor dielectric films on its FREX CMP tool platforms. The SiLKnet Alliance is sponsored by Dow Chemical Co.

The MEMS Industry Group (MIG), a trade association representing the MEMS and microstructures industries, has added Edmonton, Alberta-based Micralyne Inc. and South Portland, ME-based Fairchild Semiconductor to its roster of 40 members.

Cascade Microtech Inc., Beaverton, OR, has licensed rf measurement technology to Tokyo Seimitsu Co. Ltd. The company said the technology transfer will lead to faster and more accurate rf testing of advanced semiconductor devices during production.

ASIAFOCUS

China

Motorola Inc., Schaumburg, IL, has donated $1.48 million worth of communications equipment and employee donations to China in support of the effort to combat the spread of SARS. Resources donated by Motorola will be mainly delivered to the Logistic Guarantee Group under the National SARS Control and Prevention Headquarters.

India

Intel Corp., Santa Clara, CA, plans to invest $41 million in India to set up a facility where it will design and develop a new generation of microprocessors. The company said it hopes to more than double the number of engineers it employs in India to 2000 by the end of 2004. The proposed facility, to be built on a 43-acre campus in Bangalore, is part of Intel's plan to invest about $100 million in India over the next few years.

Japan

Ten Japanese manufacturers of semiconductor materials, including Hitachi Chemical Co. Ltd. and JSR Corp., have formed the Consortium for Advanced Semiconductor Materials and Related Technologies (CASMAT), according to a report published in Nikkei Electronics Asia. The goal of CASMAT is to revive Japan's chip industry by developing new materials that are competitive in both domestic and overseas markets.

Renesas Technology Corp., Tokyo, has begun proposing to other domestic firms that they collaborate on the construction of semiconductor mass production lines compatible with 300mm silicon wafers. The company aims to ensure production capacity of advanced system chips in Japan, while sharing high investment costs. Renesas is reportedly making appeals to such companies as NEC Electronics Corp. and Sharp Corp.

Korea

The Korean semiconductor trade balance showed signs of recovery in April after posting its largest deficit in 1Q03. According to the Korea Semiconductor Industry Association (KSIA), outbound shipments of microprocessor chips hit $1.35 billion in April, up 2.6% from March, while semiconductor imports amounted to $1.64 billion, down 16.4%.

Hynix Semiconductor Inc., Seoul, will begin volume production on its next-generation Golden Chip platform using its 0.10µm process technology. Hynix will focus on 512Mb DDR and 512Mb DDR2 SDRAM production, to be followed by a 1Gb DDR2 SDRAM launch in 2H03. Hynix expects the 0.10µm process to make up close to 20% of its production in 2003 and 65% by 2004.

Taiwan

Taiwan Semiconductor Manufacturing Co. (TSMC) expects its revenue to rise 20% this year, based mainly on strong orders for high-end chips. TSMC chairman Morris Chang said high-end orders are so strong that the company's advanced process capacity may not be sufficient to fill all orders in 2H03. TSMC, however, does not plan to increase capex this year.

ProMOS Technologies Inc., Taipei, has asked the International Chamber of Commerce to arbitrate a dispute with Infineon Technologies AG, Munich, Germany, over a technology transfer pact. ProMOS wants the chamber's court to rule that it can use technology that Infineon has already transferred to ProMOS under a pact, which has been terminated.

ProMOS also wants Infineon to pay what it owes to ProMOS under a capacity-sharing pact.

EUROFOCUS

Soitec, Bernin, France, and ASM International, Bilthoven, The Netherlands, have announced a strategic partnership to ensure the commercial manufacturability of strained silicon-on-insulator (sSOI) substrates.

Soitec and ASM will team up to use Soitec's Smart Cut technology and ASM's manufacturing tool, the Epsilon 3000 epitaxial reactor, in an effort to create the first high-volume sSOI substrate.

STMicroelectronics, Geneva, Switzerland, has acquired the assets and business of Italy-based Incard SpA from the IPM Group.

Altis Semiconductor, Corbeil-Essonnes, France, a joint venture between IBM Microelectronics and Infineon Technologies AG, will invest $202 million over three years to build an R&D center. Research will focus on developing a new generation of semiconductors based on magnetic rather than electric power.

Wacker-Chemie GmbH, Munich, Germany, will buy Nippon Steel's stake in their chip joint venture, which has silicon wafer production plants in Yamaguchi Prefecture, southern Japan, and Malaysia. The Wacker-Chemie group also plans to halt 6-in. wafer-manufacturing lines in Yamaguchi around the middle of next year, and end production of 8-in. wafers in Malaysia by the end of this year.